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Wednesday, September 24, 2014

Land Acquisition Act - Collector awarded at Rs. two lakhs per acre - Trail court enhanced the same to Rs. Nine lakhs and odd - High court reduced the same to Rs. four lakhs and odd - D.B. confirmed the same -claim for applying deduction for developments at 60% - Apex court held that As regards the judgments relied upon by the appellant, the same are distinguishable. In Indumati Chitaley case (supra), it was noticed that the land in question was agricultural land which could not be valued at par with the value of the non-agricultural land as was sought to be claimed on behalf of the appellant. In the said case, unlike the present case, there was no finding that the land had immediate potential for residential/commercial use. In Basant Kumar case (supra), it was observed that while considering an instance of developed land as the basis for determining the value of the agricultural land, one third of the value has to be deducted towards providing amenities like roads, parks, electricity, sewage etc. We have already noted the law laid down by this Court that extent of cut depends on individual fact situations. In Karigowda case (supra), it was observed that the existing potentiality alone has to be taken into consideration while determining the compensation. Remote beneficial factors cannot be made the basis for determining the compensation. It was further observed that comparable sales method is a preferred method over the other methods for determining the compensation.There is no dispute with these propositions but in the facts and circumstances of the case, we are unable to hold that the view taken by the High Court is vitiated by any error of principle propounded in the relied upon judgment or otherwise. We, thus, do not find any ground to interfere with the impugned judgment. The appeals are dismissed with no order as to costs.= CIVIL APPEAL NO.7314-7365 of 2005 UNION OF INDIA ….. APPELLANT VERSUS RAJ KUMAR BAGHAL SINGH (DEAD) TH. LRS. & ORS. ….. RESPONDENTS= 2014 - Sept. Month - http://judis.nic.in/supremecourt/filename=41897

Land Acquisition Act - Collector awarded at Rs. two lakhs per acre - Trail court enhanced the same to Rs. Nine lakhs and odd - High court reduced the same to Rs. four lakhs and odd - D.B. confirmed the same -claim for applying deduction for developments at 60% - Apex court held that As regards the judgments relied upon by the appellant, the same are distinguishable. In Indumati Chitaley case (supra), it was noticed that the land in question was agricultural land which could not be valued at par with the value of the non-agricultural land as was sought to be claimed on behalf of the appellant. In the said case, unlike the present case, there was no finding that the land had immediate potential for residential/commercial use. In Basant Kumar case (supra), it was observed that while considering an instance of developed land as the basis for determining the value of the agricultural land, one third of the value hasto be deducted towards providing amenities like roads, parks, electricity,sewage etc. We have already noted the law laid down by this Court that extent of cut depends on individual fact situations. In Karigowda case (supra), it was observed that the existing potentiality alone has to be taken into consideration while determining the compensation. Remote beneficial factors cannot be made the basis for determining thecompensation. It was further observed that comparable sales method is a preferred method over the other methods for determining the compensation.There is no dispute with these propositions but in the facts and circumstances of the case, we are unable to hold that the view taken by the High Court is vitiated by any error of principle propounded in the reliedupon judgment or otherwise. We, thus, do not find any ground to interfere with the impugnedjudgment. The appeals are dismissed with no order as to costs.=
The
Collector vide award dated 13th August, 1991, assessed the market value of
the acquired land at the rate of Rs.2 lakh per acre.
The Reference Court
enhanced the amount of compensation to Rs.9,05000/- per acre.
A learned
Single Judge of the High Court reduced the same to Rs.105.80 per square
yard vide order dated 1st April, 1999, which has been affirmed by the
Division Bench.=

Thus, the Division Bench has upheld the view of the learned Single
Judge in reducing the compensation from Rs.9,05,000/- per acre, fixed by
the Reference Court, to Rs.105.80 per square yard fixed by the learned
Single Judge in respect of the land covered by notification dated 14thMarch, 1989 and for the land covered under notification dated 16thSeptember, 1988, the compensation was marginally enhanced to Rs.4,54,662/-per acre.=In Chimanlal Hargovinddas vs. Special Land AcquisitionOfficer, Poona and anr.[4],
this Court summed up the principle as follows:-

“4. The following factors must be etched on the mental screen:

(1) …………….
[pic](2) …………….
(3) …………….
(4) …………….

(5) The market value of land under acquisition has to be determined
as on the crucial date of publication of the notification under Section 4
of the Land Acquisition Act (dates of notifications under Sections 6 and 9
are irrelevant).

(6) The determination has to be made standing on the date line of
valuation (date of publication of notification under Section 4) as if the
valuer is a hypothetical purchaser willing to purchase land from the open
market and is prepared to pay a reasonable price as on that day. It has
also to be assumed that the vendor is willing to sell the land at a
reasonable price.

(7) In doing so by the instances method, the court has to correlate
the market value reflected in the most comparable instance which provides
the index of market value.

(8) Only genuine instances have to be taken into account.
(Sometimes instances are rigged up in anticipation of acquisition of land.)

(9) Even post-notification instances can be taken into account (1)
if they are very proximate, (2) genuine and (3) the acquisition itself has
not motivated the purchaser to pay a higher price on account of the
resultant improvement in development prospects.

(10) The most comparable instances out of the genuine instances have
to be identified on the following considerations:

(i) proximity from time angle,

(ii) proximity from situation angle.

(11) Having identified the instances which provide the index of
market [pic]value the price reflected therein may be taken as the norm and
the market value of the land under acquisition may be deduced by making
suitable adjustments for the plus and minus factors vis-à-vis land under
acquisition by placing the two in juxtaposition.

(12) A balance-sheet of plus and minus factors may be drawn for this
purpose and the relevant factors may be evaluated in terms of price
variation as a prudent purchaser would do.

(13) The market value of the land under acquisition has thereafter
to be deduced by loading the price reflected in the instance taken as norm
for plus factors and unloading it for minus factors.

(14) The exercise indicated in clauses (11) to (13) has to be
undertaken in a common sense manner as a prudent man of the world of
business would do. We may illustrate some such illustrative (not
exhaustive) factors:

(15) The evaluation of these factors of course depends on the facts
of each case. There cannot be any hard and fast or rigid rule. Common sense
is the best and most reliable guide. For instance, take the factor
regarding the size. A building plot of land say 500 to 1000 sq. yds. cannot
be compared with a large tract or block of land of say 10,000 sq. yds. or
more. Firstly while a smaller plot is within the reach of many, a large
block of land will have to be developed by preparing a lay out, carving out
roads, leaving open space, plotting out smaller plots, waiting for
purchasers (meanwhile the invested money will be blocked up) and the
hazards of an entrepreneur. The factor can be discounted by making a[pic]deduction by way of an allowance at an appropriate rate rangingapproximately between 20 per cent to 50 per cent to account for landrequired to be set apart for carving out lands and plotting out smallplots. The discounting will to some extent also depend on whether it is a
rural area or urban area, whether building activity is picking up, and
whether waiting period during which the capital of the entrepreneur would
be locked up, will be longer or shorter and the attendant hazards.

(16) Every case must be dealt with on its own fact pattern bearing
in mind all these factors as a prudent purchaser of land in which position
the judge must place himself.

(17) These are general guidelines to be applied with understanding
informed with common sense.”

31. In Registrar, University of Agricultural Sciences5 whereupon Mr Ranjit
Kumar placed strong reliance, the Court noticed that if the acquisition ismade for agricultural purpose, question of development thereof would notarise; but if the sale instance was in respect of a small piece of landwhereas the acquisition is for a large piece of land, although developmentcost may not be deducted, there has to be deduction for largeness of theland and also for the fact that these are agricultural lands. In that viewof the matter, deduction at the rate of 33% made by the High Court wasupheld. It may not, therefore, be correct to contend, as has been submitted
by Mr. Ranjit Kumar, that there cannot be different deductions, one for the
largeness of the land and another for development costs.”

11. As regards the judgments relied upon by the appellant, the same are
distinguishable.
In Indumati Chitaley case (supra), it was noticed that
the land in question was agricultural land which could not be valued at par
with the value of the non-agricultural land as was sought to be claimed on
behalf of the appellant. In the said case, unlike the present case, therewas no finding that the land had immediate potential forresidential/commercial use.
In Basant Kumar case (supra), it was observed
that while considering an instance of developed land as the basis for
determining the value of the agricultural land, one third of the value has
to be deducted towards providing amenities like roads, parks, electricity,
sewage etc. We have already noted the law laid down by this Court thatextent of cut depends on individual fact situations.
In Karigowda case
(supra), it was observed that the existing potentiality alone has to be
taken into consideration while determining the compensation.
Remote
beneficial factors cannot be made the basis for determining the
compensation.
It was further observed that comparable sales method is a
preferred method over the other methods for determining the compensation.
There is no dispute with these propositions but in the facts and
circumstances of the case, we are unable to hold that the view taken by the
High Court is vitiated by any error of principle propounded in the relied
upon judgment or otherwise.
12. We, thus, do not find any ground to interfere with the impugned
judgment.
13. The appeals are dismissed with no order as to costs.

ADARSH KUMAR GOEL, J.
1. Leave granted in SLPs.
2. These appeals have been preferred against the judgment of the Punjab
& Haryana High Court in a group of matters involving the issue of
determination of compensation for the land acquired by the appellant-Union
of India in two sets of acquisition.
2. One of the notifications under Section 4 of the Land Acquisition Act,
1894 (for short “the Act”), in question, was issued on 14th March, 1989 to
acquire 72.9375 acres of land in villages Bir Kheri Gujran, District
Patiala, for development of military cantonment at Patiala in Punjab. TheCollector vide award dated 13th August, 1991, assessed the market value ofthe acquired land at the rate of Rs.2 lakh per acre. The Reference Courtenhanced the amount of compensation to Rs.9,05000/- per acre. A learnedSingle Judge of the High Court reduced the same to Rs.105.80 per squareyard vide order dated 1st April, 1999, which has been affirmed by theDivision Bench.
3. In the other set of acquisition, covered by notification underSection 4 of the Act dated 16th September, 1988, for the land measuring498.03, the Collector vide award dated 27th March, 1991, awardedcompensation at the rate of Rs.2 lakh per acre for the land in villagesKheri Gujran and Bir Kheri Gujran and for the land in villages Sher Majra,Haji Majra and Pasiana at the rate of Rs.1,50,000/- per acre. The ReferenceCourt vide award dated 6th April, 1998 enhanced thecompensation to Rs.2,75,000/- per acre for the land in villages KheriGujran and Bir Kheri Gujran. In respect of land in the revenue estate ofvillage Haji Majra, for the land upto 500 meters on Patiala Sangrur Road,compensation was awarded at the same rate but for the rest of the landcompensation was awarded at Rs.2,33,750/- per acre. For villages Pasianaand Sher Majra, the rate awarded was the same as for village Haji Majra.On further appeal, the learned Single Judge of the High Court enhanced theamount of compensation to Rs.4,48,159/- per acre which has been affirmed bythe Division Bench with slight modification by way of enhancement.
4. Thus, the Division Bench has upheld the view of the learned SingleJudge in reducing the compensation from Rs.9,05,000/- per acre, fixed bythe Reference Court, to Rs.105.80 per square yard fixed by the learnedSingle Judge in respect of the land covered by notification dated 14thMarch, 1989 and for the land covered under notification dated 16thSeptember, 1988, the compensation was marginally enhanced to Rs.4,54,662/-per acre.
5. Aggrieved by the judgment of the Division Bench, the Union of India
has preferred these appeals. However, the land owners have accepted the
compensation awarded by the Division Bench.
6. We have heard learned counsel for the parties.
7. Learned counsel for the appellant-Union of India submitted that
enhancement of compensation beyond the award of the Collector by the
Reference Court and the High Court was not justified as the sale
transactions relied upon by the land owners could not be the basis for
fixation of compensation. The said instances were of land nearer to the
city which land, being better located, had higher value. It is for this
reason that in respect of the land covered by notification dated 14th
March, 1989, rate of compensation fixed by the Reference Court was reduced
by the High Court. Plea that for taking into small instances cut of 60%should be applied was wrongly disregarded. Thus, methodology followed by
the High Court was not appropriate. Reliance has been placed on law laid
down in Basant Kumar and ors. vs. Union of India and Ors.[1], Smt. Indumati
Chitaley vs. Union of India and Anr.[2] and Special Land Acquisition
Officer vs. Karigowda and Ors.[3]. It was further submitted that the sale
transactions Exp. P-21 and P-22 have been wrongly relied upon ignoring the
objection of the appellant and on that basis the Division Bench erred in
enhancing the compensation to Rs.4,54,662/- per acre in respect of the
acquisition covered by notification dated 16th September, 1988.
8. On the other hand, learned Counsel for the land owners supported the
view taken in the impugned judgment. It was pointed out that the land waslocated adjacent to the municipal limits near Golf Course and residentialarea. Its distance was 3 kms. from Phagwara Chowk. The land had potentialvalue for development into residential and commercial area.
9. We have considered the rival submissions. Before considering the
merits of the rival contentions, we consider it appropriate to refer to the
discussion on the issue by the High Court which is as follows:-
“In the present case, situation is altogether different. While deciding
issue regarding cut, referred to above, argument of counsel for the Union
of India that cut imposed is required to be enhanced is also liable to be
rejected. In view of situation the land under acquisition, as referred to
above, cut imposed to the extent of 20% was perfectly justified. Counsel
for the Union of India has tried to support his argument by citing various
judgments but no benefit of those judgments can be extended to Union of
India because at the time when matter was argued before Additional District
Judge, no serious dispute was raised by Union of India regarding potentialvalue of the land under acquisition. No evidence was led to show that theland acquired had no potential for developing it into residential orcommercial area. Argument to impose higher cut was rightly rejected by the
learned Single Judge, after taking note of evidence on record.

Argument of counsel for the Union of India that since the land was
situated at a distance of 1 to 1-1/2 kms of municipal limits, as such,
higher cut be imposed, is not justified, in view of evidence on record. It
had come in evidence that the land under acquisition was situated next to
the municipal limits and was situated very near to golf course. In view of
this, no case is made out for further cut as prayed for.

In the present case, learned Single Judge has rightly placed reliance
to award compensation upon sale instance Ex. P-21 and Ex.P-22. While
determining compensation, reliance has also been placed on statements PW 4,
P27, PW10. It had come on record that land subject matter of sale
instance, referred to above, was situated within a distance of 20 killas or
less from the land under acquisition. Sale deed Ex. P23 was rightly
ignored as it pertained to constructed house and there was no evidence on
record to show that what was the value of land underneath the constructed
portion of the house. Under these circumstances, this Court is of the
opinion that award of compensation @ Rs.105.80 paisa per square yard to the
claimants by the learned Single Judge was perfectly justified.”

10. It is well settled in determining compensation for acquired land,
price paid in a bona fide transaction of sale by a willing seller to a
willing buyer is adopted subject to such transaction being adjacent to
acquired land, proximate to the date of acquisition and possessing similar
advantages. Of course, there are other well known methods of valuation
like opinion of experts and yield method. In absence of any evidence of a
similar transaction, it is permissible to take into account transaction of
nearest land around the date of notification under Section 4 of the Act by
making a suitable allowance. There can be no fixed criteria as to what
would be the suitable addition or subtraction from the value of the relied
upon transaction. In Chimanlal Hargovinddas vs. Special Land AcquisitionOfficer, Poona and anr.[4], this Court summed up the principle as follows:-“4. The following factors must be etched on the mental screen: (1) ……………. [pic](2) ……………. (3) ……………. (4) ……………. (5) The market value of land under acquisition has to be determinedas on the crucial date of publication of the notification under Section 4of the Land Acquisition Act (dates of notifications under Sections 6 and 9are irrelevant). (6) The determination has to be made standing on the date line ofvaluation (date of publication of notification under Section 4) as if thevaluer is a hypothetical purchaser willing to purchase land from the openmarket and is prepared to pay a reasonable price as on that day. It hasalso to be assumed that the vendor is willing to sell the land at areasonable price. (7) In doing so by the instances method, the court has to correlatethe market value reflected in the most comparable instance which providesthe index of market value. (8) Only genuine instances have to be taken into account.(Sometimes instances are rigged up in anticipation of acquisition of land.) (9) Even post-notification instances can be taken into account (1)if they are very proximate, (2) genuine and (3) the acquisition itself hasnot motivated the purchaser to pay a higher price on account of theresultant improvement in development prospects. (10) The most comparable instances out of the genuine instances haveto be identified on the following considerations: (i) proximity from time angle, (ii) proximity from situation angle. (11) Having identified the instances which provide the index ofmarket [pic]value the price reflected therein may be taken as the norm andthe market value of the land under acquisition may be deduced by makingsuitable adjustments for the plus and minus factors vis-à-vis land underacquisition by placing the two in juxtaposition. (12) A balance-sheet of plus and minus factors may be drawn for thispurpose and the relevant factors may be evaluated in terms of pricevariation as a prudent purchaser would do. (13) The market value of the land under acquisition has thereafterto be deduced by loading the price reflected in the instance taken as normfor plus factors and unloading it for minus factors. (14) The exercise indicated in clauses (11) to (13) has to beundertaken in a common sense manner as a prudent man of the world ofbusiness would do. We may illustrate some such illustrative (notexhaustive) factors:|Plus factors |Minus factors ||1. smallness of size |1. largeness of area ||2. proximity to a |2. situation in the ||road |interior at a || |distance from the || |road ||3. frontage on a road|3. narrow strip of || |land with very small || |frontage compared to || |depth ||4. nearness to |4. lower level ||developed area |requiring the || |depressed portion to || |be filled up ||5. regular shape |5. remoteness from || |developed locality ||6. level vis-à-vis |6. some special ||land under |disadvantageous ||acquisition |factor which would || |deter a purchaser ||7. special value for | ||an owner of an | ||adjoining property to| ||whom it may have some| ||very special | ||advantage | | (15) The evaluation of these factors of course depends on the factsof each case. There cannot be any hard and fast or rigid rule. Common senseis the best and most reliable guide. For instance, take the factorregarding the size. A building plot of land say 500 to 1000 sq. yds. cannotbe compared with a large tract or block of land of say 10,000 sq. yds. ormore. Firstly while a smaller plot is within the reach of many, a largeblock of land will have to be developed by preparing a lay out, carving outroads, leaving open space, plotting out smaller plots, waiting forpurchasers (meanwhile the invested money will be blocked up) and thehazards of an entrepreneur. The factor can be discounted by making a[pic]deduction by way of an allowance at an appropriate rate rangingapproximately between 20 per cent to 50 per cent to account for landrequired to be set apart for carving out lands and plotting out smallplots. The discounting will to some extent also depend on whether it is arural area or urban area, whether building activity is picking up, andwhether waiting period during which the capital of the entrepreneur wouldbe locked up, will be longer or shorter and the attendant hazards. (16) Every case must be dealt with on its own fact pattern bearingin mind all these factors as a prudent purchaser of land in which positionthe judge must place himself.(17) These are general guidelines to be applied with understandinginformed with common sense.”

Again in Viluben Jhalejar Contractor (D) by LRs. vs. State of Gujarat [5],
it was observed:-

“24. The purpose for which acquisition is made is also a relevant factor
for determining the market value. In Basavva v. Spl. Land Acquisition
Officer, (1996) 6 SCC 640, deduction to the extent of 65% was made towards
development charges.

“11. The principle of deduction in the land value covered by the comparable
sale is thus adopted in order to arrive at the market value of the acquired
land. In applying the principle it is necessary to consider all relevant
facts. It is not the extent of the area covered under the acquisition which
is the only relevant factor. Even in the vast area there may be land which
is fully developed having all amenities and situated in an advantageous
position. If smaller area within the large tract is already developed and
suitable for building purposes and have in its vicinity roads, drainage,
electricity, communications, etc. then the principle of deduction simply
for the reason that it is part of the large tract acquired, may not be
justified.”

“Ext. B-30 is a sale deed dated 9-8-1976, the transaction having taken
place prior to eight months from the issue of the preliminary notification
for acquisition of land in the present case. Having found that the piece of
land referred in Ext. B-30 is situated very close to the lands that are
acquired under the notification in question the Reference Court and the
High Court relied upon the said document and, in our view, rightly. Further
when no sales of comparable land were available where large chunks of land
had been sold, even land transactions in respect of smaller extent of land
could be taken note of as indicating the price that it may fetch in respect
of large tracts of land by making appropriate deductions such as for
development of the land by providing enough space for roads, sewers,
drains, expenses involved in formation of a layout, lump sum payment as
also the waiting period required for selling the sites that would be
formed.”

27. In Administrator General of W.B. v. Collector, (1988) 2 SCC 150,
deduction to the extent of 53% was allowed.

“10. It is then contended that 53% is not automatic but depends upon the
nature of the development and the stage of development. We are inclined to
agree with the learned counsel that the extent of deduction depends upon
development need in each case. Under the Building Rules 53% of land is
required to be left out. This Court has laid as a general rule that for
laying the roads and other amenities 33-1/3% is required to be deducted.
Where the development has already taken place, [pic]appropriate deduction
needs to be made. In this case, we do not find any development had taken
place as on that date. When we are determining compensation under Section
23(1), as on the date of notification under Section 4(1), we have to
consider the situation of the land development, if already made, and other
relevant facts as on that date. No doubt, the land possessed potential
value, but no development had taken place as on the date. In view of the
obligation on the part of the owner to hand over the land to the City
Improvement Trust for roads and for other amenities and his requirement to
expend money for laying the roads, water supply mains, electricity etc.,
the deduction of 53% and further deduction towards development charges @ 33-
1/3%, as ordered by the High Court, was not illegal.”

29. In Hasanali Khanbhai & Sons v. State of Gujarat (1995) 5 SCC 422 and
Land Acquisition Officer v. Nookala Rajamallu, (2003) 12 SCC 334 : (2003)
10 Scale 307, it has been noticed that where lands are acquired for
specific purposes deduction by way of development charges is permissible.

30. We are not, however, oblivious of the fact that normally one-thirddeduction of further amount of compensation has been directed in somecases. (See Kasturi v. State of Haryana, (2003) 1 SCC 354, Tejumal Bhojwaniv. State of U.P., (2003) 10 SCC 525, V. Hanumantha Reddy v. LandAcquisition Officer & Mandal R. Officer, (2003) 12 SCC 642, H.P. HousingBoard v. Bharat S. Negi, (2004) 2 SCC 184 and Kiran Tandon v. AllahabadDevelopment Authority, (2004) 10 SCC 745.)31. In Registrar, University of Agricultural Sciences5 whereupon Mr RanjitKumar placed strong reliance, the Court noticed that if the acquisition ismade for agricultural purpose, question of development thereof would notarise; but if the sale instance was in respect of a small piece of landwhereas the acquisition is for a large piece of land, although developmentcost may not be deducted, there has to be deduction for largeness of theland and also for the fact that these are agricultural lands. In that viewof the matter, deduction at the rate of 33% made by the High Court wasupheld. It may not, therefore, be correct to contend, as has been submittedby Mr. Ranjit Kumar, that there cannot be different deductions, one for thelargeness of the land and another for development costs.”11. As regards the judgments relied upon by the appellant, the same aredistinguishable. In Indumati Chitaley case (supra), it was noticed thatthe land in question was agricultural land which could not be valued at parwith the value of the non-agricultural land as was sought to be claimed onbehalf of the appellant. In the said case, unlike the present case, therewas no finding that the land had immediate potential forresidential/commercial use. In Basant Kumar case (supra), it was observedthat while considering an instance of developed land as the basis fordetermining the value of the agricultural land, one third of the value hasto be deducted towards providing amenities like roads, parks, electricity,sewage etc. We have already noted the law laid down by this Court thatextent of cut depends on individual fact situations. In Karigowda case(supra), it was observed that the existing potentiality alone has to betaken into consideration while determining the compensation. Remotebeneficial factors cannot be made the basis for determining thecompensation. It was further observed that comparable sales method is apreferred method over the other methods for determining the compensation.There is no dispute with these propositions but in the facts andcircumstances of the case, we are unable to hold that the view taken by theHigh Court is vitiated by any error of principle propounded in the reliedupon judgment or otherwise.12. We, thus, do not find any ground to interfere with the impugnedjudgment.13. The appeals are dismissed with no order as to costs.